Pharmaceutical Product Development (PPDI) NewsBite

Pharmaceutical Product Development closed yesterday at $44.51. So far the stock has hit a 52-week low of $30.52 and 52-week high of $49.39. Pharmaceutical Product Development stock has been showing support around 43.18 and resistance in the 45.46 range.

Technical indicators for the stock are Bullish and S&P gives PPDI a positive 4 STAR (out of 5) buy rating. For a hedged play on this stock, look at an Apr '08 45 covered call (PJQ DI) for a net debit in the $41.56 area.

That is also the break even stock price for this trade. This covered call has an 81 day duration, provides 6.63% downside protection and an 8.28% assigned return rate for a 37.30% annualized return rate (comparison purposes only).

A lower cost hedged play for this stock would use a longer term call option in place of the covered call stock purchase. To use this strategy look at going long the PPDI Jan '09 25 Call (OLY AE) and selling the Apr '08 45 call (PJQ DI) for a $17.30 debit. The trade has an 81 day life and would provide 4.97% downside protection and a 15.61% assigned return rate for a 70.00% annualized return rate (for comparison purposes only). Pharmaceutical Product Development has a current annual dividend yield of 0.90%. [IHF - Investors Observer]

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